Cross-border rice export to China harms official export

Cross-border rice export to China harms official export

While the General Department of Customs (GDC) reported the sharp fall in the rice export turnover in the first nine months of 2013, the Vietnam Food Association (VFA) said Vietnam has no more rice to export. The problem is that a big amount of rice has been crossing the border into China.

Phong has also predicted that the plan on exporting 7 million tons of rice would be unattainable.

However, while the rice exports through official channels decrease, the products still have been going out of the Vietnamese territory through unofficial channel.

A preliminary report showed that some 1.2 million tons has crossed the northern border, mostly the Lao Cai border gate, to China.

It was estimated that some 5,000 tons of rice crossed the Lao Cai border gate to China everyday in early October 2013, while the figure has increased to 10,000 tons. The rice price at the border area is VND9,000 per kilo, while there is no special requirement in quality.

About 30 enterprises, with no rice export license, have been collecting rice in the domestic market to carry to China.

Since the enterprises do not have licenses, they have been exporting under the names of other licensed enterprises, paying the commission of $1-2 per ton.

In the latest news, Vietnamese rice price has been recovering thanks to the high exports to China and the contracts signed with the Philippines. This is thought to help farmers sell rice at better prices and reduce the high inventories caused by the sharp fall in the demand from the main import markets, which consume 2/3 of Vietnamese total rice exports.

However, analysts have warned that this would do more harm than good. It would be worrying that the rice output is abundant, while Vietnam does not have enough rice to export through official channel. The cross-border export has been hampering the export through official channel.

Local newspapers have quoted Deputy Minister of Industry and Trade Tran Tuan Anh as saying that the massive exports to China would put a pressure on other enterprises. He said that Vietnam not only exports rice to China, but it also needs to increase the exports through official channels to ensure the benefits of involving parties.

Anh went on to say that the sharp increases in exports across the border would affect the Vietnam – China trade relation, because the two countries have committed to join forces to push up the export through official channel.

Phong of VFA, while admitting the unsatisfactory rice export performance so far this year, affirmed that many more orders would come from now until the end of the year. Meanwhile, he warned that the inventories may get exhausted if rice continues flowing to China.

VFA has proposed the Ministry of Industry and Trade to instruct the northern enterprises that export rice to China to register the export with the local industry and trade departments, while it has recommended southern enterprises not to sign the export authorization contracts.

vietnamnet